Charlotte's Web (CWBHF) investor relations material

Executive summary

• Completed a transformative transaction with BAT, converting $54M–$55M in debt and $10M in interest into equity, adding $10M in new capital, eliminating major liabilities, and strengthening the balance sheet.

• Achieved first annual revenue growth since 2021, with 0.5% year-over-year increase to $49.9M in 2025, driven by new product launches and digital marketing improvements.

• Positioned as a leader and launch partner in the CMMI Medicare pilot, enabling federally authorized CBD access for seniors, with broader expansion possible via Medicare Advantage.

• Advanced pharmaceutical development through DeFloria, with FDA clearance for Phase 2 trials of AJA001 for ASD-related irritability and exclusive manufacturing rights.

• Achieved zero findings in NSF Dietary Supplement GMP audit, validating manufacturing quality.

Financial highlights

• Q4 2025 net revenue was $13.3M, up 15.8% sequentially and 4.7% year-over-year, driven by direct-to-consumer growth and product innovation.

• Q4 gross profit was $5M with a 37.5% margin, impacted by a $1.3M non-recurring inventory charge; underlying margin improved due to in-house manufacturing and channel mix.

• Full-year 2025 net revenue was $49.9M, up 0.5% year-over-year; SG&A expenses fell 21.2% to $42M.

• Full-year gross profit was $21.7M (43.5% margin), up from $21.3M (42.8%) in 2024.

• Operating loss improved 36%–36.6% to $20.3M in 2025 from $32M in 2024.

• Full-year net loss was $29.7M ($0.19/share), flat year-over-year; Adjusted EBITDA loss was $12.9M, similar to 2024.

• Q4 net cash used in operations was $1.9M, with year-end cash at $8M and working capital at $21.7M, not including the BAT capital injection.

Outlook and guidance

• Gross margin expected to normalize toward 50% as transitional items are lapped and efficiencies scale.

• Quarterly SG&A for the core business projected at $10M–$11M, excluding Medicare program launch costs.

• Early days for CMMI pilot; revenue impact expected to build gradually over 12–18 months, with significant long-term potential as Medicare Advantage expands.

• In-house manufacturing and cost controls projected to further enhance margins and cash flow.

• BAT transaction and CMMI pilot participation expected to drive long-term growth and profitability.